Income Tax (Amendment No. 28) (Jersey) Law 2007

Income Tax (Amendment No. 28) (Jersey) Law 2007 Arrangement Article Part 1 273 Preliminary and transitional provision for 2007 273 1 Interpretation . 273 2 Schedule 5 amended . 273 Part 2 274 Change to basis of assessment For Trades, professions and vocations from 2008 274 3 Article 3 amended . 274 4 Article 4A inserted . 274 5 Articles 64A to 64H inserted . 275 6 Article 65 amended . 278 7 Article 66 to 69 repealed . 278 8 Article 149A amended . 278 9 Schedule 6 added . 279 10 Years of assessment for which Part 2 has effect 281 Part 3 281 Corporate Taxation From 2008 281 11 Article 3 amended . 281 12 Article 3AA inserted . 282 13 Article 88 amended . 282 14 Heading to Part 17 substituted . 282 15 Article 123B amended . 283 16 Articles 123C to 123F inserted . 283 17 New Part heading inserted . 285 18 Years of assessment for which Part 3 has effect 286 Part 4 286 Corporate Taxation From 2009 286 19 Article 123 amended . 286 20 Article 123A repealed . 286 21 Article 123B amended . 286 22 Article 123C amended . 286 23 Article 123D amended . 287 24 Years of assessment for which Part 4 has effect 287 pART 5 287 taxation of trade of property development from 2009 287 25 Article 3 amended . 287 26 Article 16 amended . 287 27 Article 22 amended . 288 28 Article 51 substituted . 288 29 Article 51A inserted . 288 30 Article 52 amended . 289 31 Article 53 amended . 289 32 Article 54A inserted . 289 33 Article 55 substituted . 289 34 Article 55A inserted . 290 35 Article 61 amended . 290 36 Article 62A inserted . 290 37 Article 70 amended . 290 38 Article 92B amended . 290 39 Article 107A amended . 290 40 Article 108 amended . 291 41 Article 131 amended . 291 42 Years of assessment for which Part 5 has effect 291 Part 6 291 Taxation of non-residents from 2009 291 43 Article 3 amended . 291 44 Article 42 amended . 292 45 Article 118B inserted . 292 46 Article 128A inserted . 292 47 Schedule 3A inserted . 292 48 Years of assessment for which Part 6 has effect 300 pART 7 300 method of collection of annual and other payments from 2009 300 49 Article 86 amended . 300 50 Article 87 amended . 300 51 Years of assessment for which Part 7 has effect 301 pART 8 301 Assessments to prevent avoidance from 2009 301 52 Article 134A amended . 301 53 Commencement of Part 8 . 301 Part 9 301 Closing 301 54 Citation . 301 Income Tax (Amendment No. 28) (Jersey) Law 2007 A LAW to amend further the Income Tax (Jersey) Law 1961. Adopted by the States 30th January 2007 Sanctioned by Order of Her Majesty in Council 13th June 2007 Registered by the Royal Court 22nd June 2007 THE STATES , subject to the sanction of Her Most Excellent Majesty in Council, have adopted the following Law – Part 1 Preliminary and transitional provision for 2007 1 Interpretation In this Law, “principal Law” means the Income Tax (Jersey) Law 1961 [1] . 2 Schedule 5 amended (1) After paragraph 4 of Schedule 5 to the principal Law there shall be added the following paragraph – “5 Income Tax (Amendment No. 28) (Jersey) Law 2007: transitional provision for Article 67 (1) A notice cannot be given under Article 67 in the case of a trade, profession or vocation which was set up or commenced in 2006. (2) However, a person charged or liable to be charged to income tax in respect of the profits or gains of a trade, profession or vocation which was set up or commenced in 2006 shall be entitled, on giving notice, in writing, to the Comptroller on or after 1st January 2008 but no later than 31st December 2008, to require that tax shall be charged for the year of assessment 2007 on the amount of the profits or gains for that year. (3) A person may, by giving notice, in writing, to the Comptroller on or before 31st December 2008, revoke a notice given under sub-paragraph (2). (4) If, at any time during 2007, any such change as is mentioned in Article 75 occurs in the persons engaged in the trade, profession or vocation, a notice given under sub-paragraph (2) or (3) must be signed by each of the persons who were engaged in the trade, profession or vocation at any time between 1st January 2007 and the giving of the notice or, in the case of a deceased person, by his or her legal representatives. (5) In the case of the death of a person who, if he or she had not died would, under sub-paragraph (2), have become chargeable to income tax for 2007, the tax that would have been so chargeable shall be assessed and charged on his or her executors or administrators and shall be a debt due from and payable out of his or her estate. (6) There shall be made such additional assessments, reductions of assessments or repayments of tax as may in any case be required in order to give effect to sub-paragraph (2).”. (2) This Article shall have effect for the year of assessment 2007 and ensuing years. Part 2 Change to basis of assessment For Trades, professions and vocations from 2008 3 Article 3 amended In Article 3(1) of the principal Law the following definitions shall be inserted in their appropriate places in the alphabetical order of definitions – “ ‘accounting date’ shall be construed in accordance with Article 4A;”; “ ‘financial period’ shall be construed in accordance with Article 4A;”. 4 Article 4A inserted After Article 4 of the principal Law there shall be inserted the following Article – “4A Meaning of, and provision as to, financial period and accounting date (1) The financial period of a company or of a trade, profession or vocation is the period for which its accounts are made up. (2) Subject to any power in this Law for the Comptroller to determine an accounting date, the accounting date for a company or a trade, profession or vocation, is the day on which its financial period ends. (3) A financial period shall not exceed 18 months.”. 5 Articles 64A to 64H inserted After Article 64 of the principal Law there shall be inserted the following Articles – “64A General provision as to period of computation for trade, profession or vocation Subject to Articles 64B to 64E, tax shall be charged in the case of a trade, profession or vocation on the full amount of the balance of the profits or gains of the trade, profession or vocation for the financial period ending in the year of assessment. 64B Change of financial period and accounting date (1) Where, by virtue of a change in the financial period for a trade, profession or vocation, there are 2 or more accounting dates for it in a year of assessment, tax shall be charged on the aggregate of the full amounts of the balance of profits or gains for each financial period ending on those dates. (2) Where – (a) there is a change in the financial period for a trade, profession or vocation; (b) the new accounting date is in the year of assessment immediately following the year of assessment in which the preceding accounting date fell; and (c) the Comptroller is of the opinion that the change is not made in good faith and for the purpose of facilitating the good management of the business, the Comptroller may charge the trade, profession or vocation to tax, for the year of assessment in which the new accounting date falls, on the full amount of the balance of the profits or gains for the period of 12 months ending on that date. (3) Where – (a) there is a change in the financial period for a trade, profession or vocation; (b) the new accounting date is neither in the same year of assessment as the preceding accounting date nor in the year of assessment immediately following that year; and (c) the Comptroller is of the opinion that the change is not made in good faith and for the purpose of facilitating the good management of the business, the Comptroller may – (i) determine an accounting date in the year of assessment immediately following the year of assessment in which the preceding accounting date fell; and (ii) charge the trade, profession or vocation to tax, for the year of assessment in which the determined accounting date falls, on the full amount of the balance of the profits or gains for the period of 12 months ending on that date. (4) The accounting date determined under paragraph (3) shall be the same day, in the same month, as the new accounting date. 64C Commencement of trade, profession or vocation (1) Subject to paragraph (2), where a trade, profession or vocation is set up and commenced, tax shall first be charged for the year of assessment in which the first financial period ends, on the full amount of the balance of the profits or gains of the trade, profession or vocation for that period. (2) Where the first financial period of the trade, profession or vocation does not end in the first year of assessment or the second year of assessment, the Comptroller shall determine an accounting date in the second year of assessment for it. (3) Subject to paragraph (4), the accounting date determined under paragraph (2) shall be the same day, in the same month, as the accounting date which falls in the third year of assessment. (4) Where there is more than one accounting date in the third year of assessment, the first of those dates shall be used for the purposes of paragraph (3). (5) Where the profits or gains of a trade, profession or vocation are charged to tax in the second year of assessment by virtue of an accounting date being determined under paragraph (2), tax shall be charged for the third year of assessment on the full amount of the balance of the profits or gains of the first financial period, after deduction of an amount equal to the profits or gains charged to tax in the second year of assessment by virtue of paragraph (2). (6) For the purposes of this Article and Article 64D – ‘first financial period’, in relation to a trade, profession or vocation, means the financial period beginning on the day it is set up and commenced; ‘first year of assessment’, in relation to a trade, profession or vocation, means the year in which it is set up and commenced; ‘second year of assessment’ means the year following the first year of assessment; ‘third year of assessment’ means the year following the second year of assessment. 64D Discontinuance of trade, profession or vocation (1) Subject to paragraphs (2) and (3), where a trade, profession or vocation is permanently discontinued, tax shall be charged, in the year of assessment in which the discontinuance occurs, on the full amount of the balance of the profit or gains for the period beginning on the day following the accounting date preceding the date of discontinuance and ending on the date of discontinuance. (2) Where, in the year of assessment in which the trade, profession or vocation is permanently discontinued, there are one or more accounting dates preceding the date of discontinuance, tax shall be charged on the aggregate of the full amounts of the balance of profits or gains for each financial period ending on those dates and for the period described in paragraph (1). (3) Where a trade, profession or vocation is permanently discontinued in the first year of assessment or the second year of assessment, tax shall be charged for the period beginning on the date the trade, profession or vocation is set up and commenced and ending on the date of its discontinuance. 64E Trade, profession or vocation transferred to or from Jersey (1) This Article applies – (a) where a trade, profession or vocation previously carried on in a place outside Jersey transfers to, and continues to be carried on, in Jersey; and (b) where a trade, profession or vocation previously carried on in Jersey transfers to, and continues to be carried on, in a place outside Jersey. (2) Tax shall be charged for the year of assessment in which the trade, profession or vocation transfers, on such portion of the full amount of the balance of the profits or gains of the trade, profession or vocation as equates to the portion of that year for which the trade, profession or vocation is carried on in Jersey. 64F Apportionment of profits or gains of trade, profession or vocation (1) Where the period for which tax is to be charged on the full amount of the balance of the profits or gains of a trade, profession or vocation does not coincide with a financial period, the full amount of the balance of the profits or gains for the financial periods which overlap with the period for which tax is to be charged shall be apportioned so as to arrive at the full amount of the balance of the profits or gains for the period for which tax is to be charged. (2) Where the full amount of the balance of the profits or gains for the period for which tax is to be charged, determined in accordance with paragraph (1), does not, in the opinion of the Comptroller, fairly represent the full amount of the balance of the profits or gains of the period for which tax is to be charged, the Comptroller may direct that the apportionment shall be made another way. 64G Liability of executors or administrators for tax on the profits or gains of a trade, profession or vocation In the case of the death of a person who, if he or she had not died, would have been chargeable to income tax for any year under Articles 64A to 64E, the tax which would have been so chargeable – (a) shall be assessed and charged on the person’s executors or administrators; and (b) shall be a debt due from and payable out of the person’s estate. 64H Deduction from profits or gains of trade or profession for premiums payable (1) Where any land in Jersey is occupied for the purposes of any trade or profession, a deduction shall be allowed, in calculating the full amount of the balance of the profits or gains arising from that trade or profession, for any premium paid in consideration of the grant of a lease or sub-lease, or for the assignment of a lease, of that land to the extent that the premium has been charged to tax under Schedule A of this Law. (2) In this Article ‘land’ and ‘premium’ have the same meanings as in Part 8.”. 6 Article 65 amended (1) In the heading to Article 65 of the principal Law, for the words “ under Cases I and II ” there shall be substituted the words “ for offices, employments and pensions ”. (2) In paragraph (1) of Article 65 of the principal Law – (a) for the words “Cases I and II” there shall be substituted the words “Case II”; (b) sub-paragraph (a) shall be deleted. 7 Article 66 to 69 repealed Articles 66 to 69 shall be repealed. 8 Article 149A amended In Article 149A of the principal Law, for the words “Schedule 5” there shall be substituted the words “Schedules 5 and 6”. 9 Schedule 6 added After Schedule 5 to the principal Law, there shall be added the following Schedule – “SCHEDULE 6 (Article 149A) Transitional Arrangements in AND RELATED TO 2008 for Basis of computation for Trade, profession or vocation 1 Basis of computation in 2008 for existing trade, profession or vocation (1) This paragraph applies in the case of a trade, profession or vocation which, for the year of assessment 2007, was charged to tax in accordance with Article 65(1) in the case described in sub-paragraph (a) of that provision. (2) Notwithstanding Article 64A but subject to sub-paragraph (3), tax shall be charged in the case of the trade, profession or vocation for the year of assessment 2008 on one half of the aggregate of the full amount of the profits or gains of the trade, profession or vocation for the financial periods ending in 2007 and 2008. (3) Where, by virtue of a change in an accounting date, the aggregate of the financial periods ending in 2007 and 2008 for a trade, profession or vocation is less than 24 months, tax shall be charged on the product of the following formula – A x 365 D Where – A is the aggregate of the full amount of the profits or gains of the trade, profession or vocation for the financial periods ending in 2007 and 2008 D is the aggregate of the number of days in those financial periods. (4) Notwithstanding Article 106C(5), the basis period for the purposes of Articles 106A and 106B shall be the same as the aggregate of the financial periods ending in 2007 and 2008. (5) Where the aggregate amount of profits or gains determined in accordance with sub-paragraph (2) or (3) has been adjusted, pursuant to Article 107 or 108, by reference to a loss sustained for the year of assessment 2007, an amount equal to the amount of relief already given shall be credited to the amount on which tax is to be charged by virtue of sub-paragraph (2) or (3). (6) Where, apart from this sub-paragraph, relief would be allowed in respect of losses sustained in a trade, profession or vocation in a financial period ending in 2008 instead of in respect of losses sustained in that year – (a) for the purposes of Articles 107 to 108, the amount of losses taken to have been sustained in the trade, profession or vocation shall be one half of the aggregate of the losses sustained in the financial periods ending in 2007 and 2008; and (b) without prejudice to any relief already given and to which sub-paragraph (5) applies, no relief shall be granted under those Articles in respect of the remainder of the aggregate of those losses. 2 Basis of computation in 2008 for trade, profession or vocation commenced in 2006 or 2007 (1) This paragraph applies in the case of a trade, profession or vocation commenced and set up in 2006 or 2007. (2) Notwithstanding Articles 64A and 64C, tax shall be charged for the year of assessment 2008 on the full amount of the profits or gains of the trade, profession or vocation for the financial period ending in 2008 save that – (a) there shall be included in that amount any profits or gains which have not been charged to tax in 2006 or 2007; (b) there shall be excluded from that amount any profits or gains which have been charged to tax in 2006 or 2007. 3 Basis of computation for trade, profession or vocation discontinued in 2008 Notwithstanding its repeal, Article 68 shall continue to apply, for the year of assessment 2008, in the case of a trade, profession or vocation that is permanently discontinued in 2008, apart from a trade, profession or vocation that is set up and commenced in that year. 4 Power of Comptroller to make adjustments and apportionments (1) Where, in relation to the taxation of the profits or gains of a trade, profession or vocation, the effect of a transaction or of a series of transactions is the avoidance, reduction or deferral of liability of any person to the charge to tax for the year of assessment 2008, the Comptroller may, in his or her discretion, make such adjustments and apportionments as respects the liability of that person to tax as may in the opinion of the Comptroller be appropriate to counteract the avoidance, reduction or deferral of liability which would otherwise be effected by or as a result of that transaction or series of transactions. (2) Without prejudice to the generality of sub-paragraph (1), where – (a) the amount of the profits or gains of a trade, profession or vocation is calculated in accordance with paragraph 1; and (b) the income so calculated is either at least 10% more, or at least 10% less, than the amount of the profits or gains of the trade, profession or vocation charged to tax in the year of assessment 2007, it shall be presumed that there has been a transaction which has resulted in the avoidance, reduction or deferral of the liability of a person to the charge for tax for the year of assessment 2008 and, subject to sub-paragraph (3), the Comptroller may exercise his or her powers under sub-paragraph (1) accordingly. (3) The presumption in sub-paragraph (2) shall be rebutted if the person shows, to the satisfaction of the Comptroller – (a) that no such transaction has occurred; or (b) that the profits or gains of the trade, profession or vocation for the financial periods ending in 2007 and 2008 were computed in accordance with the ordinary commercial principles applicable to the computation of such profits or gains. (4) This paragraph is without prejudice to the generality of Article 134A. 5 Application of Article 64G Article 64G shall apply to the charge to income tax under paragraphs 1 and 2 as it applies to the charge to income tax under Articles 64A to 64E.”. 10 Years of assessment for which Part 2 has effect This Part shall have effect for the year of assessment 2008 and ensuing years. Part 3 Corporate Taxation From 2008 11 Article 3 amended In Article 3(1) of the principal Law, the following definitions shall be inserted in their appropriate place in the alphabetical order of definitions – “ ‘financial services company’ means any company that – (a) is registered under the Financial Services (Jersey) Law 1998 [2] to carry out investment business or trust company business; (b) is registered under the Banking Business (Jersey) Law 1991 [3] , other than a company registered for business continuity under that Law, pursuant to Article 9A of the Banking Business (General Provisions) (Jersey) Order 2002 [4] ; or (c) holds a permit under the Collective Investment Funds (Jersey) Law 1988 [5] by virtue of being a functionary who is an administrator or custodian mentioned in Part 2 of the Schedule to that Law;”; “ ‘permanent establishment’, in relation to a company, includes a branch of the company, a factory, shop, workshop, quarry or a building site, and a place of management of the company, but the fact that the directors of a company regularly meet in Jersey shall not, of itself, make their meeting place a permanent establishment;”. 12 Article 3AA inserted After Article 3 of the principal Law there shall be inserted the following Article – “3AA Power to amend definition The Minister may by Order amend the definition ‘financial services company’ in Article 3(1).”. 13 Article 88 amended In Article 88 of the principal Law – (a) at the beginning of paragraph (1) there shall be inserted the words “Subject to paragraphs (2) and (3),”; (b) after paragraph (1) there shall be inserted the following paragraphs – “(2) A company to which Article 123C applies shall not be entitled, when paying a dividend, to make any deduction from it. (3) A company to which Article 123D applies shall only be entitled, when paying a dividend, to deduct tax at the rate of 10%.”. 14 Heading to Part 17 substituted For the heading to Part 17 of the principal Law there shall be substituted the following heading – “Part 17 “Special provisions as to bodies corporate”. 15 Article 123B amended In Article 123B(3) of the principal Law, for the words “Notwithstanding Article 1” there shall be substituted the words “Notwithstanding Articles 1, 123C and 123D,”. 16 Articles 123C to 123F inserted After Article 123B of the principal Law there shall be inserted the following Articles – “123C Non-financial services companies (1) This Article applies to a company – (a) which is first regarded as resident in Jersey, or which first has a permanent establishment in Jersey, on or after 3rd June 2008; and (b) which is not a financial services company or a utility company. (2) Notwithstanding the rate of tax required by Article 1 to be charged for a year of assessment, a company to which this Article applies shall be charged to tax under Schedule D at the rate of 0%. (3) In paragraph (1), ‘utility company’ means – (a) The Jersey New Waterworks Company Limited, registered by Act of the Royal Court dated 11th February 1882 in accordance with the provisions of the Loi (1861) sur les Sociétés à Responsabilité Limitée [6] ; (b) the Jersey Gas Company Limited continued in existence by Article 2 of the Jersey Gas Company (Jersey) Law 1989 [7] ; (c) the Jersey Electricity Company Limited registered by Act of the Royal Court dated 5th April 1924 in accordance with the provisions of the Loi (1861) sur les Sociétés à Responsabilité Limitée; (d) a person licensed to run part or all of a public telecommunications system under the Telecommunications (Jersey) Law 2002 [8] ; (e) a person authorized to convey letters by a licence granted under the Postal Services (Jersey) Law 2004 [9] . (4) For the purposes of this Law, the income, profits and gains of a company to which this Article applies shall be determined in accordance with United Kingdom generally accepted accounting principles. 123D Financial services companies (1) This Article applies to a financial services company which is first regarded as resident in Jersey or which first has a permanent establishment in Jersey, on or after 3rd June 2008. (2) Notwithstanding the rate of tax required by Article 1 to be charged for a year of assessment, a company to which this Article applies shall be charged to tax under Schedule D at the rate of 10%. (3) For the purposes of this Law, the income, profits and gains of a company to which this Article applies shall be determined in accordance with United Kingdom generally accepted accounting principles. 123E Apportionment on change of status during year (1) Where, a company is a company to which Article 123C or 123D applies for only part of a year of assessment, the company shall only be charged to tax in accordance with Article 123C or 123D, as the case requires, on the portion of its income, profits or gains on which it is charged to tax under Schedule D for that year that equates to the portion of year for which it is a company to which the relevant Article applies. (2) This Article is subject to Articles 64C to 64E in the case of the commencement, discontinuance or transfer of a trade, profession or vocation. 123F Group relief for financial services companies (1) This Article applies where a qualifying company that is a member of a group suffers a loss for a financial period (referred to in this Article as the ‘surrendering company’). (2) Another qualifying company that is a member of the same group (the ‘claimant company’) may apply for the relief described in paragraph (7). (3) An application under paragraph (2) must be – (a) made by the claimant company no later than the expiration of 2 years following the year of assessment in which the financial period for which the surrendering company suffered the loss ended; and (b) accompanied by a declaration made by the surrendering company in accordance with paragraph (5). (4) In its application, the claimant company must state – (a) its financial period to which the application relates; (b) its profits or gains for that period, having regard, where required, to paragraph (9). (5) In its declaration, the surrendering company must state – (a) its financial period to which the application relates; (b) its loss for that period, having regard, where required, to paragraph (9); (c) the amounts (if any) of the loss previously surrendered under this Article, and to whom. (6) The Comptroller shall grant the relief if he or she is satisfied that, throughout the financial period for which the surrendering company suffered the loss, both companies were – (a) qualifying companies; and (b) members of the same group. (7) The relief is that, subject to paragraph (8), the surrendering company’s loss, or so much of it as is surrendered to the claimant company, is offset against the claimant company’s profits or gains for a financial period which is the same as, or overlaps with, the financial period for which the surrendering company suffered the loss. (8) Where the claimant company’s financial period only overlaps with the surrendering company’s financial period, the maximum amount of the surrendering company’s loss that can be surrendered to the claimant company is the portion of that loss that equates to the portion of the claimant company’s financial period that overlaps with the financial period of the surrendering company. (9) Where a company’s financial period exceeds 12 months, there shall be taken into account under this Article only such portion of the company’s loss or, as the case requires, the company’s profits or gains, of that period as equate to such portion that the period of 12 months is of the financial period. (10) For the purposes of this Article – ‘financial period’ means the period for which the accounts of a company are made up; ‘group’ means a qualifying company, which has one or more 51% subsidiaries which are all qualifying companies, together with that or those subsidiaries; ‘qualifying company’ means – (a) a company to which Article 123D applies; or (b) a company which, under Article 123B(3A), is taxed at a rate of 10% or more on the profits or gains of its international activities.”. 17 New Part heading inserted Before Article 124 of the principal Law there shall be inserted the following heading – “Part 17A Special provisions as to Individuals under disability and deceased persons”. 18 Years of assessment for which Part 3 has effect This Part shall have effect for the year of assessment 2008 and ensuing years. Part 4 Corporate Taxation From 2009 19 Article 123 amended In Article 123(1) of the principal Law the words “Except as provided in Article 123A,” shall be deleted. 20 Article 123A repealed Article 123A of the principal Law shall be repealed. 21 Article 123B amended In Article 123B(13) of the principal Law, for the definition “beneficial interest” there shall be substituted the following definition – “ ‘beneficial interest’ means any interest (whether equitable, legal or contractual) other than an interest as a bare nominee or trustee, and whether such interest is a contingent interest or direct, or through or partly through, a body corporate or a trust, and a person shall be deemed to have a beneficial interest in a company if he or she has any right to acquire or dispose of any share or debenture in that company or any interest therein or to vote in respect thereof, or if the person’s consent is necessary for the exercise of any of the rights of other persons interested therein, or if other persons interested therein can be required or are accustomed to exercise their rights in accordance with his or her instructions; but a loan to a company shall not be regarded as an interest in the company if the loan is made by a bank carrying on a bona fide banking business in Jersey;”. 22 Article 123C amended For paragraph (1) of Article 123C of the principal Law there shall be substituted the following paragraph – “(1) This Article applies to a company – (a) which is regarded as resident in Jersey or which has a permanent establishment in Jersey; and (b) which is not a financial services company or a utility company.”. 23 Article 123D amended For paragraph (1) of Article 123D of the principal Law there shall be substituted the following paragraph – “(1) This Article applies to a financial services company which is regarded as resident in Jersey or which has a permanent establishment in Jersey.”. 24 Years of assessment for which Part 4 has effect This Part shall have effect for the year of assessment 2009 and ensuing years. pART 5 taxation of trade of property development from 2009 25 Article 3 amended In Article 3(1) of the principal Law – (a) in sub-paragraph (c) of the definition “earned income”, after the word “charged” there shall be inserted the words “under Schedule A, by virtue of Article 51(1)(b), or”; (b) for the definition “trade” there shall be substituted the following definition – “ ‘trade’ includes every disposal, on a commercial basis, of land, any building or structure, or any part thereof, and every trade, manufacture, adventure or concern in the nature of trade;”; (c) after paragraph (1) there shall be inserted the following paragraph – “(1A) References in this Law to the disposal of land, any building or structure, or any part thereof, are to its sale, transfer or lease, or to the issue or transfer of shares in a company, the ownership of which shares confers an exclusive right to occupy it.”. 26 Article 16 amended In Article 16(4) of the principal Law, after the words “chargeable under” there shall be inserted the words “Schedule A, by virtue of Article 51(1)(b), or”. 27 Article 22 amended In Article 22(3) of the principal Law after the word “rentes” there shall be inserted the words “or, by virtue of Article 51(1)(b), of profits or gains”. 28 Article 51 substituted For Article 51 of the principal Law there shall be substituted the following Article – “51 Schedule A (1) The Schedule referred to in this Law as Schedule A is as follows – Tax under this Schedule shall be charged on – (a) the annual profits or gains arising in respect of any rents or receipts as follows, that is to say – (i) rents under leases of land in Jersey, (ii) rentes, and (iii) other receipts arising to the owner of land in Jersey from, or by virtue of, the owner’s ownership of that land; (b) the annual profits or gains arising or accruing from the trade, carried on in Jersey, of the disposal, on a commercial basis, of land or any building or structure, or any part thereof, which is situated in Jersey or elsewhere. (2) For the purposes of paragraph (1)(b), where the disposal is of land or any building or structure, or any part thereof, which is situated in Jersey, the land, building or structure shall be a fixed place of business through which the trade is exercised, whether or not the disposal is made or concluded in Jersey. (3) Subject to paragraph (4), if rent is payable under a lease under which the tenant is entitled to the use of furniture, and tax in respect of the payment for its use is chargeable under Schedule D, tax in respect of the rent shall be charged under Schedule D instead of under this Schedule. (4) The person charged or liable to be charged in accordance with paragraph (3) shall be entitled, on giving notice in writing to the Comptroller within 2 years after the end of the year of assessment, to elect that paragraph (3) shall not apply. (5) Where notice is given under paragraph (4), there shall be made such additional assessments, reductions of assessments or repayments of tax as the case may require.”. 29 Article 51A inserted After Article 51 of the principal Law there shall be inserted the following Article – “51A Basis of computation under Schedule A (1) Tax shall be charged under Schedule A in respect of the profits or gains described in Article 51(1)(a) by reference to the rent, rentes or receipts to which the person becomes entitled in the year of assessment. (2) Tax shall be charged under Schedule A in respect of the profits or gains described in Article 51(1)(b) in accordance with Articles 64A to 64H, as if they were the profits or gains of a trade charged under Case I of Schedule D.”. 30 Article 52 amended (1) At the end of the heading to Article 51 of the principal Law there shall be added the words “ in respect of rents, etc. ”. (2) In Article 52(1) of the principal Law, after the words “under this Schedule” there shall be inserted the words “pursuant to Article 51(1)(a)”. 31 Article 53 amended In Article 53 after the words “Schedule A” there shall be inserted the words “pursuant to Article 51(1)(a)”. 32 Article 54A inserted After Article 54 of the principal Law there shall be inserted the following Article – “54A Deductions under Schedule A in respect of property development Articles 70, 70A and 83 shall apply for the purposes of computing the amount of the profits or gains to be charged under Schedule A pursuant to Article 51(1)(b) as they apply for the purposes of computing the amount of the profits or gains to be charged under Schedule D Case I in respect of a trade.”. 33 Article 55 substituted For Article 55 of the principal Law there shall be substituted the following Article – “55 Persons chargeable under Schedule A (1) Subject to paragraph (2), tax under Schedule A shall be charged on and paid by the persons receiving or entitled to the profits or gains in respect of which tax under Schedule A is, in this Law, directed to apply. (2) Articles 74 to 76A shall apply to the taxation under Schedule A of the trade of property development, pursuant to Article 51(1)(b), as they apply to the taxation of any other trade under Schedule D Case 1.”. 34 Article 55A inserted After Article 55 of the principal Law there shall be inserted the following Article – “55A Miscellaneous provisions applicable to property development Articles 84 and 85 shall apply to and for the purposes of the charge to tax under Schedule A pursuant to Article 51(1)(b) as they apply to and for the purposes of the charge to tax under Schedule D.”. 35 Article 61 amended Paragraph (1A) of Article 61 of the principal Law shall be repealed. 36 Article 62A inserted After Article 62 of the principal Law there shall be inserted the following Article – “62A Disapplication of Schedule D to property development Notwithstanding Article 61(1) and Article 62(1) Case I, tax under Schedule D shall not be charged on the profits or gains of the trade of property development, which are charged to tax under Schedule A by virtue of Article 51(1)(b).”. 37 Article 70 amended In Article 70(c) of the principal Law, after the words “Schedule A” there shall be inserted the words “pursuant to Article 51(1)(a)”. 38 Article 92B amended In Article 92B(5) of the principal Law, in the definition “qualifying income”, after the words “Schedule D,” there shall be inserted the words “or under Schedule A pursuant to Article 51(1)(b),”. 39 Article 107A amended In Article 107A of the principal Law – (a) in paragraph (1), for the words “under Schedule D in respect of that trade, profession or vocation” there shall be substituted the words “in respect of that trade, profession or vocation under Schedule A, in the case of the trade of property development, or under Schedule D, in any other case”; (b) in paragraph (3), for the words “Schedule D” there shall be substituted the words “Schedule A or Schedule D, as the case requires,”; (c) for paragraph (4) there shall be substituted the following paragraph – “(4) In this Article – ‘immediately preceding year of assessment’ means the year immediately preceding the year in which the loss has been sustained; ‘the trade of property development’ means the trade charged to tax under Schedule A pursuant to Article 51(1)(b).”. 40 Article 108 amended In Article 108 of the principal Law – (a) in paragraph (1), for the words “under Schedule D in respect of that trade, profession or vocation” there shall be substituted the words “in respect of that trade, profession or vocation under Schedule A, in the case of the trade of property development, or under Schedule D, in any other case”; (b) in paragraph (2), for the words “Schedule D” there shall be substituted the words “Schedule A or Schedule D, as the case requires,”; (c) after paragraph (3) there shall be added the following paragraph – “(4) In this Article, ‘the trade of property development’ has the meaning given in Article 107A(4).”. 41 Article 131 amended In Article 131(1) of the principal Law after the words “assessment to income tax” there shall be inserted the words “under Schedule A, to the extent that it is charged on the trade of property development pursuant to Article 51(1)(b) or”. 42 Years of assessment for which Part 5 has effect This Part shall have effect for the years of assessment 2009 and ensuing years. Part 6 Taxation of non-residents from 2009 43 Article 3 amended In Article 3(1) of the principal Law after the definition “partnership” there shall be inserted the following definition – “‘stock dividend’ means – (a) share capital issued by a company in consequence of the exercise by any person of an option conferred on the person to receive, in respect of shares of the company, either cash or additional share capital; (b) bonus share capital issued by a company in respect of shares in the company of a relevant class;”. 44 Article 42 amended In Article 42(1B) of the principal Law after the words “Article 41B(5) or 41E(5)” there shall be inserted the words “or under paragraph 3(8) or 4(8) of Schedule 3A”. 45 Article 118B inserted After Article 118A of the principal Law there shall be inserted the following Article – “118B Exemption of certain income, profits or gains of a non-resident (1) Exemption from income tax shall be granted under Schedule D in respect of the following income, profits or gains of a person who is not resident in Jersey – (a) interest paid in respect of or credited to a deposit with a person registered under the Banking Business (Jersey) Law 1991; (b) cash dividends paid and stock dividends issued by a company regarded as resident in Jersey; (c) income arising from a pension payable under the Social Security (Jersey) Law 1974 [10] ; (d) income arising or accruing from a purchased life annuity. (2) In this Article, “purchased life annuity” has the same meaning as in Article 132(9).”. 46 Article 128A inserted After Article 128 of the principal Law there shall be inserted the following Article – “128A Collection of tax on rental income of non-resident landlords Schedule 3A shall have effect to make provision for the collection of tax on the rental income of non-resident landlords.”. 47 Schedule 3A inserted After Schedule 3 there shall be inserted the following Schedule – “SCHEDULE 3A (Article 128A) Collection of Tax on Rental Income of Non-REsident Landlords 1 Interpretation of Schedule 3A In this Schedule – ‘agent’ means a person resident in Jersey who has the direction, control or management of land in Jersey – (a) that is owned by a non-resident; and (b) in respect of which rent is payable; ‘certificate’ means a certificate issued under paragraph 7; ‘non-resident’ means a person who is not resident in Jersey; ‘property’ means land, buildings, tenements, heritages and hereditaments; ‘quarter’ means a period of 3 months ending on 31st March, 30th June, 30th September or 31st December; ‘rent’ means any amount described in Article 51(1)(a); ‘tenancy’ includes a lease; ‘tenant’ means a person who pays rent under a tenancy. 2 Requirement for agents to register (1) A person who, on 1st January 2009, is an agent shall, within 30 days of that date, register in accordance with this paragraph. (2) A person who, after 1st January 2009, becomes an agent shall, within 30 days of becoming an agent, register in accordance with this paragraph. (3) The person shall provide the Comptroller with the following information – (a) his or her name and address and the reference number (if any) assigned to him or her by the Comptroller; (b) in respect of each non-resident for whom he or she is the agent – (i) the non-resident’s name and address and the reference number (if any) assigned to the non-resident by the Comptroller, (ii) in respect of each property of which the agent has direction, control or management on behalf of the non-resident – (A) the address of the property; (B) the name and, if different, the address of the tenant in respect of the property; (C) the amount of rent, rentes and other receipts payable in respect of the property; (D) whether or not the non-resident has produced a certificate in respect of the property. (4) An agent shall, within the period of 30 days after the end of a quarter, inform the Comptroller of any change in the information described in sub-paragraph (3). (5) The Comptroller may require any information to be provided under this paragraph to be so provided in such form and delivered in such manner and accompanied by such declaration as he or she specifies. (6) A person who does not comply with this paragraph shall be guilty of an offence and liable to a fine of level 3 on the standard scale. 3 Duty of agent to account for tax on rent (1) An agent who receives rent in respect of property in Jersey on behalf of a non-resident shall deduct from the net rent received, and retain, tax at the standard rate. (2) Sub-paragraph (1) shall not apply if – (a) the non-resident has produced a certificate in respect of the property; and (b) the agent is satisfied that the certificate is in force at the time the rent is received. (3) For the purposes of sub-paragraph (1), the net rent received is the rent received after deduction of – (a) any fee charged by the agent in respect of his or her services as agent of the property; and (b) any expenses legitimately incurred by the agent, on behalf of the non-resident, in the management of the property; (4) An agent shall maintain a record of deductions made pursuant to sub-paragraph (1). (5) An agent shall, within the period of 30 days after the end of a quarter, make a return to the Comptroller of the following information in respect of each property for which he or she is the agent of a non-resident – (a) the address of the property; (b) the name of the non-resident; (c) the amount of rent due in respect of the property in the quarter; (d) the amount of rent paid in respect of the property in the quarter; (e) the amount and a description of each expense deducted from the rent so paid; (f) the amount of tax deducted from the rent so paid or that no tax has been deducted, pursuant to a certificate. (6) The Comptroller may require the return required by sub-paragraph (5) to be made in such form and delivered in such manner and accompanied by such declaration as he or she specifies. (7) An agent who does not comply with sub-paragraph (5) shall be guilty of an offence and liable to a fine of level 3 on the standard scale. (8) The agent shall, within the period of 30 days after the end of a quarter, remit to the Comptroller an amount equal to the aggregate of all monies deducted and retained by the agent in the quarter pursuant to sub-paragraph (1). (9) An agent who does not comply with sub-paragraph (8) shall be guilty of an offence and liable to a fine of – (a) level 4 on the standard scale; and (b) an amount not exceeding the monies not remitted, in contravention of that sub-paragraph. (10) The imposition of a fine under sub-paragraph (9)(b) shall not discharge the agent’s liability to remit the monies required under sub-paragraph (8). (11) Where a non-resident proves, to the satisfaction of the Comptroller, that a deduction has been made from rent, in accordance with sub-paragraph (1), the non-resident shall be entitled to have the deduction treated as a payment of tax by him or her, notwithstanding that the agent has failed to remit the monies to the Comptroller in accordance with sub-paragraph (8). (12) An agent who does not make a deduction in accordance with sub-paragraph (1) when accounting to a non-resident but who remits to the Comptroller the monies required by sub-paragraph (8) as if a deduction had been made, may recover that amount from the non-resident as a civil debt. 4 Duty of tenant to account for tax on rent (1) This paragraph applies where – (a) rent in respect of property in Jersey is not received by an agent on behalf of a non-resident; and (b) the tenant is liable to pay the non-resident or another person on behalf of the non-resident (other than an agent) rent of more than £25,000 per annum or, where the tenancy is for less than a year, the proportionate amount of that sum which is determined by the duration of the tenancy in that year. (2) The tenant shall, before paying rent to the non-resident or another person on behalf of the non-resident, deduct from the rent, and retain, tax at the standard rate. (3) Sub-paragraph (2) shall not apply if – (a) the non-resident has produced a certificate in respect of the property; and (b) the tenant is satisfied that the certificate is in force at the time the rent is paid. (4) A tenant shall maintain a record of monies deducted and retained pursuant to sub-paragraph (2). (5) A tenant shall, within the period of 30 days after the end of a quarter, make a return to the Comptroller of the following information in respect of each property for which he or she has paid rent after deduction of tax in accordance with sub-paragraph (2) – (a) the address of the property; (b) the name and address of the non-resident; (c) the amount of rent due in respect of the property in the quarter; (d) the amount of rent paid in respect of the property in the quarter; (e) the amount of tax deducted from the rent so paid.

(6) The Comptroller may require the return required by sub-paragraph (5) to be made in such form and delivered in such manner and accompanied by such declaration as he or she specifies. (7) A tenant who does not comply with sub-paragraph (5) shall be guilty of an offence and liable to a fine of level 3 on the standard scale. (8) The tenant shall, within the period of 30 days after the end of a quarter, remit to the Comptroller an amount equal to the aggregate of all monies deducted and retained by the tenant in the quarter pursuant to sub-paragraph (2). (9) A tenant who does not comply with sub-paragraph (8) shall be guilty of an offence and liable to a fine of – (a) level 4 on the standard scale; and (b) an amount not exceeding the monies not remitted, in contravention of that sub-paragraph. (10) The imposition of a fine under sub-paragraph (9)(b) shall not discharge the tenant’s liability to remit the monies required under sub-paragraph (8). (11) Where a non-resident proves, to the satisfaction of the Comptroller, that a deduction has been made from rent, in accordance with sub-paragraph (2), the non-resident shall be entitled to have the deduction treated as a payment of tax by him or her, notwithstanding that the tenant has failed to remit the amount to the Comptroller in accordance with sub-paragraph (8). (12) A tenant who fails to make a deduction on accordance with sub-paragraph (2) when paying rent to a non-resident but who remits to the Comptroller the amount required by sub-paragraph (8) as if a deduction had been made, may recover that amount from the non-resident as a civil debt. (13) Where a tenant deducts tax and remits it to the Comptroller in accordance with this paragraph, the non-resident shall give the tenant a discharge as if the rent had been paid without deduction. 5 Duty of agent to make annual return (1) A person who, at any time during a year, has been an agent shall, no later than 31st March following that year, make a return to the Comptroller for that year in respect of each non-resident for whom he or she was an agent during that year. (2) The return required by sub-paragraph (1) shall – (a) contain the information specified in sub-paragraph (3); and (b) be in the form, delivered in the manner and accompanied by the declaration required by the Comptroller. (3) The information specified, in respect of each non-resident is – (a) the non-resident’s name and address and the reference number (if any) assigned to the non-resident by the Comptroller, (b) in respect of each property of which, during the year, the agent has had direction, control or management on behalf of the non-resident – (i) the address of the property, (ii) the name and, if different, the address of the tenant of the property, (iii) the aggregate amount of rent paid in respect of the property during the year, (iv) the aggregate amount of tax deducted from that rent, or that no tax has been deducted, pursuant to a certificate, (v) where the tenancy of the property commenced during the year, the date it commenced, (vi) where the tenancy of the property ended during the year, the date it ended. (4) The person making the return shall provide the non-resident to whom the information required by sub-paragraph (3) relates with a copy of that information. (5) A person who does not comply with this paragraph shall be guilty of an offence and liable to a fine of level 3 on the standard scale. 6 Duty of tenant to make annual return (1) A person who, at any time during a year, has been a tenant required to deduct and retain tax under paragraph 4 shall, no later than 31st March following that year, make a return to the Comptroller in respect of each non-resident to whom he or she paid rent after deduction of tax pursuant to that paragraph. (2) The return required by sub-paragraph (1) shall – (a) contain the information specified in sub-paragraph (3); and (b) be in the form, delivered in the manner and accompanied by the declaration required by the Comptroller. (3) The information specified, in respect of each non-resident is – (a) the non-resident’s name and address and the reference number (if any and if known to the tenant) assigned to the non-resident by the Comptroller, (b) in respect of each property for which the tenant paid rent to the landlord during the year – (i) the address of the property, (ii) the aggregate amount of rent paid in respect of the property during the year, (iii) the aggregate amount of tax deducted from that rent, (iv) where the tenancy of the property commenced during the year, the date it commenced, (v) where the tenancy of the property ended during the year, the date it ended. (4) The person making the return shall provide the non-resident to whom the information required by sub-paragraph (3) relates with a copy of that information. (5) A person who does not comply with this paragraph shall be guilty of an offence and liable to a fine of level 3 on the standard scale. 7 Certificate for payment without deduction (1) A non-resident may apply to the Comptroller for rent in respect of a property, or all properties in Jersey, of which he or she is the landlord to be paid without deduction of tax, whether by an agent or a tenant. (2) An application under sub-paragraph (1) shall be made in such form and manner, and accompanied by such information, as the Comptroller may require. (3) The Comptroller may grant an application under sub-paragraph (1) if he or she is satisfied – (a) that the rent in respect of the property or properties is exempt from tax under Article 115; or (b) that the non-resident has consistently complied with the requirements of this Law in full and without delay. (4) On granting an application, the Comptroller shall issue a certificate to the non-resident. (5) The certificate shall have effect until it is cancelled and may be issued subject to conditions. (6) The Comptroller may cancel a certificate at any time when – (a) he or she is no longer satisfied as to the matters described in sub-paragraph (3)(a) or (b); or (b) the conditions attached to the certificate have not been complied with. (7) Upon cancelling a certificate, the Comptroller shall notify the non-resident, in writing, and shall take such steps as he or she considers appropriate to notify any agent or the tenant of the property to which the certificate related of its cancellation. (8) A person who, with the intention of procuring the payment of rent without deduction of tax, contrary to this Schedule, produces to another person – (a) a document purporting to be a certificate issued under this paragraph, knowing it to be false; or (b) a certificate issued under this paragraph knowing that it has been altered by a person other than the Comptroller, shall be guilty of an offence and liable to a fine of level 4 on the standard scale. (9) A person who, with the intention of procuring the payment of rent without deduction of tax, contrary to this Schedule, produces a certificate to another person, knowing that the certificate has been cancelled, shall be guilty of an offence and liable to a fine of level 4 on the standard scale. (10) An application under this paragraph may be made on or after 1st July 2008. 8 Treatment of amounts remitted to Comptroller The Comptroller shall receive an amount remitted under paragraph 3(8) or 4(8) or an amount proved to have been deducted, by virtue of paragraph 3(11) or 4(11), as a payment of tax by the non-resident for the year of assessment for which the non-resident is charged under Schedule A in respect of the rent pursuant to Article 51A(1). 9 Terms of tenancy or other agreement to be void A tenancy or an agreement for the services of an agent shall be void to the extent that it provides for a tenant to pay rent without deduction of tax, in contravention of this Schedule or for an agent to account, without deduction of tax, for rent received in contravention of this Schedule.”. 48 Years of assessment for which Part 6 has effect This Part shall have effect for the year of assessment 2009 and ensuing years. pART 7 method of collection of annual and other payments from 2009 49 Article 86 amended In Article 86 of the principal Law – (a) in paragraph (2) – (i) after the words “is payable” there shall be inserted the words “by an individual resident in Jersey”, (ii) in sub-paragraphs (c) and (e) and in sub-paragraph (d), in the second place that it appears, for the word “person” there shall be substituted the word “individual”; (b) in paragraph (3), after the word “paid”, in the second place that it appears, there shall be inserted the words “by an individual resident in Jersey,”. 50 Article 87 amended In Article 87 of the principal Law – (a) at the beginning of paragraph (1) there shall be inserted the words “Subject to paragraphs (3) to (5),”; (b) after paragraph (2) there shall be inserted the following paragraphs – “(3) Paragraph (1) shall only apply to a payment of any interest of money mentioned in sub-paragraph (a) thereof where the person by or through whom the payment is made is an individual resident in Jersey. (4) Paragraph (1) shall only apply to any annuity or other annual payment mentioned in sub-paragraph (a) thereof where the person or persons by or through whom the payment is made is or are – (a) an individual resident in Jersey; (b) an assurance company carrying on life assurance business; or (c) the trustees of a superannuation fund who are resident in Jersey. (5) Paragraph (1) shall only apply to a payment mentioned in sub-paragraph (b) thereof where the person by or through whom the payment is made is an individual resident in Jersey.”. 51 Years of assessment for which Part 7 has effect This Part shall have effect for the year of assessment 2009 and ensuing years. pART 8 Assessments to prevent avoidance from 2009 52 Article 134A amended In Article 134A of the principal Law – (a) in paragraph (1), for the words “a transaction” there shall be substituted the words “a transaction, or a combination or series of transactions,”; (b) in the proviso to paragraph (1) – (i) in sub-paragraph (a), for the words “the transaction” there shall be substituted the words “the transaction, or the combination or series of transactions”, (ii) in sub-paragraph (b), after the words “bona fide commercial transaction” there shall be inserted the words “, or that the combination or series of transactions was a bona fide combination or series of transactions”; (c) in paragraph (3) – (i) in sub-paragraph (a), for the words “the transaction” there shall be substituted the words “the transaction, or the combination or series of transactions”, (ii) in sub-paragraph (b), after the words “bona fide commercial transaction” there shall be inserted the words “, or that the combination or series of transactions was a bona fide combination or series of transactions”. 53 Commencement of Part 8 This Part shall come into force on 1st January 2009. Part 9 Closing 54 Citation This Law may be cited as the Income Tax (Amendment No. 28) (Jersey) Law 2007. a.h. harris Deputy Greffier of the States [1] chapter 24.750 [2] chapter 13.225 [3] chapter 13.075 [4] chapter 13.075.50 [5] chapter 13.100 [6] L.1/1861 (repealed) [7] chapter 27.300 [8] chapter 06.288 [9] chapter 06.145 [10] chapter 26.900